Wind energy industry awaits signing of outstanding PPAs

The South African Wind Energy Association (SAWEA) together with the broader renewable power sector anticipates the conclusion of the 26 outstanding power purchase agreements (PPAs) in the first quarter of 2018. The majority of the processes that precede the finalisation of the PPAs were fulfilled by the IPP Office and the preferred bidders during mid-December.

The Minister of Public Enterprises, Lynne Brown, is now required to provide her approval in terms of section 54(2) of the Public Finance Management Act so that the Department of Energy (DoE) can conclude direct agreements with preferred bidders.

Brenda Martin, the CEO of SAWEA, says that since all previous steps have been completed, the industry is now awaiting the final step in the process: approval by Minister Brown so that the DoE can finally enter into power purchase agreements with the preferred bidders identified through due procurement process.

The bidders of the 26 renewable energy projects, which include wind, solar PV and CSP remain hopeful that the country’s Renewable Energy Procurement Programme (REIPPPP) will allow the industry to continue to contribute to the country’s development and electricity mix. The bulk of the outstanding projects are earmarked for construction in the Northern Cape, which has over 60% of the preferred bid allocation, and the Eastern Cape which has 19%. The balance of the projects are to be located in the North West (10%), Western Cape (6%) and Mpumalanga (1%).

Following due procurement, the preferred bidders should have received signed PPAs from Eskom by mid-2016. Instead, a delay now entering its third year has halted the associated R58-billion investment and the creation of 15 000 jobs at a time when the country desperately needs economic stimulus.

Martin says that the unsigned PPAs have caused serious damage to the South African economy and investor confidence. The jobs which have not been realised, the loss of jobs throughout the renewable energy value chain, the cost of lost investor confidence, along with the loss of public confidence in good governance, are serious considerations.

The REIPPPP is widely regarded as one of the country’s most successful public-private-partnership projects resulting in over R20-billion being committed to socio-economic development, the majority of which goes to empowering South Africa’s rural communities.

Martin says SAWEA will continue to engage with government in the hope of receiving a formal notice from the minister regarding the date for conclusion of outstanding PPAs very soon.